How to write a Board of Directors’ Code of Conduct
A code of conduct is a tool your co-operative’s Board of Directors can use to hold each other accountable and maintain high standards for how board members conduct themselves. By adopting a code of conduct, your board’s directors make a commitment to uphold agreed-upon standards and monitor each other’s behaviour when managing the affairs of the co-op.
A code of conduct gives members some reassurance that directors are mindful of potential problems, and it gives the board some recourse if they have to deal with conflicts or bad behaviour by a director.
A code of conduct should not be used to target any one director, and it’s not a silver bullet for overcoming problematic board dynamics. Instead, think of the code of conduct as a set of directions that educates new board members about their duties as directors. It can also serve as a reminder of how to handle difficult situations and set the tone for conduct around the board table.
Generally, your code of conduct should include three components:
The purpose of the code of conduct
The “covenants” directors will swear to uphold
Space for each director to consent or acknowledge their agreement to uphold the terms of the code of conduct
You should customize your code of conduct to match your co-op’s purpose and the values your board holds. These ideals, along with standard fiduciary duties and generally accepted standards for corporate board governance, should form the basis of the code’s covenants.
Check out our sample code of conduct, and adapt this when creating your own:
Sample Code of Conduct for a Co-operative’s Board of Directors
Purpose: The Directors of the Co-operative shall uphold standards set forth in the code of conduct to ensure the well-being of the Co-operative, to ensure compliance with relevant laws and regulations placed upon the Co-operative, and to preserve integrity and collegiality among Directors.
The Board of Directors agree to the following covenants:
Duty of Care: I shall exercise due care and diligence in the performance of my duties as a Director of the Co-operative. I shall attend board meetings, review materials provided to the Directors, ask questions, and make decisions that I feel are in the best interest of the Co-operative. I shall not make decisions or act in a way that is detrimental to the Co-operative.
Duty of Loyalty: In my capacity as a Director of the Co-operative, I shall act in the best interest of the Co-operative rather than my own interests or those of another entity to which I have a fiduciary duty.
Confidentiality: I shall maintain confidentiality of all information obtained in my duties as a Director of the Co-operative. I shall only disclose information from Board meetings, decisions, or materials legally necessary for public disclosure or if deemed appropriate by the Board.
Conflicts of Interest: I shall declare any actual or perceived conflicts of interest and shall not participate in any discussion or decision in which I have a conflict of interest. I shall also inform the Chair of any instance where another Director fails to disclose an actual or perceived conflict of interest.
Compliance: I shall, to the best of my ability, ensure the Board of Directors and Co-operative are compliant with all applicable laws, regulations, and ethical standards. I shall follow the policies and standards set by the Co-operative’s Board.
Co-op Values: I shall uphold the values and principles of the co-operative in my work as a Director.
Diversity and Inclusion: I shall promote openness, diversity and inclusion in hiring practices, contracting, nominations, and board business.
Fair and Respectful: I shall treat all employees, members, Directors, and other stakeholders with respect and fairness and shall not engage in discriminatory behaviour, harassment, or unfair practices.
Accountability: I shall hold myself and other Directors accountable ensuring we fulfill our responsibilities as Directors, our duties to the Co-operative, and the standards adopted by the Board.
Continuous Improvement and Learning: I shall participate in learning opportunities available to me as a Director of the Co-operative and will seek out opportunities to enhance my skills as a Director.
I __________________________________ agree to uphold the standards set in this code of conduct, the articles of incorporation, and the bylaws. I agree to fulfill my duties to the best of my ability. I acknowledge that a violation of this code of conduct or failure to uphold the standards reasonably adopted by the Board may result in disciplinary action taken by the Board, including removal from the Board of Directors.